A $38 billion taxpayer bailout in an era of fiscal austerity is even less palatable when one considers how little Britons will benefit economically for their efforts.
A recent Goldman Sachs report concludes that the limited gain to the UK economy this summer will dissipate before the year is out. Similarly, Moody’s Richard Morawetz says, “Overall, we think that the Olympics are unlikely to provide a substantial boost to the UK economy and believe that the impact of infrastructure developments on UK GDP has probably already been felt.”
London’s Olympic legacy will mirror that of practically every previous host city. As the academic research literature clearly shows, the promise of large long-term benefits is an economic mirage.
Increases in tourism are marginal, quite transitory, and even less pronounced for well-known destinations, such as London. There is no empirical evidence from past Olympics to suggest that London will enjoy net increases in either employment or real per capita personal income.
The same monies could have been spent on far more worthwhile projects than temporarily boosting a sense of national pride. Or, hard-pressed taxpayers could have been allowed to keep their own money to spend how they chose. Thankfully, the IOC spared American taxpayers both the cost and the insult incurred by their transatlantic cousins.
Patrick Basham directs the Democracy Institute (www.democracyinstitute.org) and is a Cato Institute (www.cato.org) adjunct scholar.
